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bills and save money, seeing a financial planner
is often a low priority. StatePlus research reveals
the top two reasons that Australians, including
women, don’t seek advice is that they think it
will be too expensive and believe they don’t have
enough assets to justify it. However, according to
the 2017 StatePlus Robo Advice Research Update,
in 2012, an individual believed they needed to
have more than $250,000 in assets before they
sought professional financial advice. In April
2017, that figure had dropped to just $80,000,
which may indicate that more Australians are
recognising that quality financial advice may be
appropriate for them.
At the same time, evolutions in technology
offer some new options to overcome the concern
around people not seeking advice. Digital and
omni-channel advice can be a cheaper and a less
confrontational way of starting the process. It’s
also important to provide flexibility – for example,
by offering advice on a weekend, as opposed to
only during ‘traditional’ office hours.
A second important initiative is that, as an
industry, we can do more to encourage women
to become financial planners. Research suggests
women are more likely to seek help from, and
form a long term professional relationship with,
a female rather than a male financial planner.
This is in part because the sense of having had
common experiences—whether that be having
children, being out of the paid workforce for a
period of time, or even a significant event such as
a divorce—which can create a strong connection.
Presently, one third of StatePlus financial
planners are women, and we would like to see
that figure rise. We would also like to see younger
planners from different backgrounds in the
industry. Currently, the average age is around
50 and planners are overwhelmingly men. As an
industry, we need to do more to attract younger
people of both genders and from different
backgrounds into the industry as a whole.
Lastly, the use of behavioural finance is also
a necessity, because understanding people’s
preferences about money, how they make
decisions, whether they are likely to make rational
or irrational decisions, and what is important
to them, is crucial. Gamification can be a good
way of doing this because it provides powerful
information via a game-like interface, whereas the
old-fashioned process of risk profiling through the
use of detailed questionnaires can be challenging.
This is where financial literacy is key, and why
more education about finances and investing
is essential. Many younger people don’t deal
with money on a regular basis: everything is
paid for with a card and/or online, so they can
lose sight of the basics of budgeting. This is
one of the negative consequences of the lack
of housing affordability: a mortgage is at the
very least an enforced saving plan. For those
unwilling or unable to take out a mortgage due
to skyrocketing property prices, the reality is they
may be less likely to get into the discipline of
budgeting and commit the same amount to a
long term savings plan.
QUALITY FINANCIAL ADVICE CAN CHANGE
WOMEN’S LIVES
The bottom line is that the super system can do
little to combat wage disparity between men and
women and the consequences for super balances
at retirement. There are peripheral improvements
to be made, such as enforced paid parental leave
which includes super contributions – but what
we really need to focus on is better access to
professional financial advice for all Australians,
and for women in particular. Because we know
it’s a sure-fire way of improving retirement
outcomes by helping people to understand and
take advantage of the financial strategies that are
available, and tailoring these to make the most of
the opportunities.
Dr Suzanne Doyle is head of advice at StatePlus.
Superfunds July 2017